Economic environment improves in Sultanate
Oman has been ranked 62 in the Global Competitiveness Index 2017– 18 Rankings by the World Economic Forum, four points up from the previous ranking of 66. The fiscal reforms initiated over the past few years have also come in for praise.
The report, released last week, says: “Oman (62nd) moves up by four places and improves in terms of its macroeconomic environment and higher education and training. The government is passing substantial fiscal reforms to help the economy adjust to the new situation of low oil prices and preserve the sustainability of public finances.”
According to the report, the reforms include a cut in fuel subsidies and other distortive fiscal measures, an increase in corporate tax and the introduction of GCC-wide VAT system in 2018.
It said the country can rely on strong institutions and infrastructure. However, it needs to continue efforts to upgrade education and training systems and fundamentally reform the labour markets. The key challenging factors that have been identified are related to labour reforms and access to financing. Oman is ranked 76 (out of 137) for innovation, which means there is plenty of scope to expand the capacity for innovation, quality of scientific research institutions, company spending on R&D, university-industry collaboration in R&D, government procurement of advanced technology products, availability of scientists and engineers and patents.
Among other countries in the GCC, UAE is ranked 17 (earlier 16), Qatar 25 (18), Saudi Arabia 30 (29), Bahrain 44 (48) and Kuwait 52 (38).
The report says the Middle East and North Africa has improved its average performance this year, in part because the new normal of low oil and gas prices is forcing many countries to implement reforms to increase diversification.
Looking at the data over the past decade, it becomes clear how the fall in oil prices has affected the macroeconomic environment in the region.
This, it said, has mainly affected some GCC economies’ macroeconomic performance negatively. In many other countries, the fall in oil prices has increased the fiscal space because energy subsidies could be reduced.
On the positive side, heavy investment in digital and technological infrastructure has allowed major improvements in technological readiness, but these have not yet led to an equally large turnaround in the region’s level of innovation.
The report tracks the performance of close to 140 countries on 12 pillars of competitiveness and seeks to help decision-makers understand the complex and multifaceted nature of the development challenge, to design better policies based on public-private collaboration and to take action to restore confidence in the possibilities of continued economic progress.
Improving the determinants of competitiveness, as identified in the 12 pillars of the GCI, requires the coordinated action of the state, the business community and civil society.